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Seed Funds in India

Posted on Friday, Jun 23rd 2006

In my previous piece, I posed the question whether a next Bill Gates might emerge out of Bangalore, which developed into a discussion on seed investment in India, and its lack thereof.

This then led me to ask around, and collect some information on efforts to put together seed funds, as well as support very early stage entrepreneurs in India.

Subrata Mitra of Erasmic had first approached me with this concept, about a year back. I asked him for an overview of the early-stage investment scenario in India yesterday.

“… there really are the following organizations which are trying to do things at our level:
1. Band of angels (from Delhi)
2. Mentor Partners (from Bangalore)
3. Seed fund (Mumbai)
4. There’s one other fellow who is supposed to setup in Hyderabad; not sure where they are.

Funds such as Ashish Gupta (HelionVC) & others are much bigger ($100+M, and are in the real VC side of things). However, the following US funds have made early stage investments in India: DFJ, Sierra, Sequoia (WBCP) and Battery. Not sure about any others.”

Also from K. Ganesh, CEO of TutorVista, who just raised Series A from Sequoia (Westbridge): “See TiE Bangalore EAP program that is trying to help entrepreneurs”. (Btw, Ganesh and his team have boot-strapped their seed stage, and raised the Sequoia money only after they built up a bit of traction, albeit very little for a consumer play, nothing statistically significant.)

In summary, there IS a very early stage investment community coming together in India. I have a great deal of respect for these guys for venturing, since it is an extremely high risk segment to play in. The market needs are high on the mentoring side, relatively low on the capital aspect. Most of these funds understand that, and are hands on.

Erasmic considers companies for funding with the following characteristics, in an India-US mode:

* Indian companies that have little or no access to markets outside of India but have some customer validation and (usually) a small revenue stream in place

* US founders that have ideas that require a strong Development / BPO like back-end presence

* US founders with product ideas that can receive significant VC traction once an initial team, prototype & early validation is in place through involvement of this fund

The first category does not qualify as seed investment per se, but the two latter categories do. It is also a much better strategy to pair up experienced entrepreneurs in the US, close to the market, with entrepreneurs / early team members in India, to mitigate risks.

In the case of entrepreneurs like K. Ganesh, they are India-based successful back-office entrepreneurs. Whether they will be able to scale their expertise to be able to market to US consumers – remains to be seen.

Anyway, I will continue to track this segment, and invite opinions and contributions from both investors and entrepreneurs who are active in the space. If you have interesting information, please email me, or add your comments right here.

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Comments

The scenario of Angel Funding and VC funding in the India context of startups is definitely changing, which is alarmingly good. Even VCs in the Valley are now not hesitant to fund startups which are offshored to India.

Brajeshwar Saturday, June 24, 2006 at 12:14 AM PT

i will youing E-mail Id

anand s Friday, July 28, 2006 at 3:08 AM PT

Can somebody provide me the contact details of Krishnan Ganesh – CEO Tutor Vista in Bangalore.???

Gaurav Monday, August 28, 2006 at 12:40 AM PT

What is the fund size of erasmic? how many investments they have? Their website is pretty cluttered and looks like a presentation site for LP’s!!

Poulomi Friday, September 8, 2006 at 8:10 AM PT

Erasmic is a tiny fund, $5 Million under management.

Sramana Mitra Friday, September 8, 2006 at 5:06 PM PT

How can I get contact email of Subrata Mitra ? I would like to present our Business Plan and we are looking for 1-2Cr. at this point.

Bhaskar Roy Friday, February 2, 2007 at 2:32 AM PT

My email – bhaskar.roy@icarez.com

Bhaskar Roy Friday, February 2, 2007 at 2:33 AM PT

Subrata Mitra
E-mail Address(es):
subrata@erasmic.com

Sramana Mitra Friday, February 2, 2007 at 11:48 AM PT

Hi,

Want to have the contact details of Ganesh K of Tutor Vista.

Thanks

Sreedhar Friday, March 16, 2007 at 4:55 AM PT

I have many new ideas and looking for dedicated co-founders in web business who could help me go through these ideas, i am based in
jalandhar, punjab, india. i have personal industrial family background for over 65 years (before independence). moreover, i am thinking registering my company in U.S as inc. or LLC. Preferably aged between 18-22. If interested contact hargurnaz@gmail.com

Moreover, i want funds for startup how to get funding external not from family.

Hargurnaz Wednesday, July 18, 2007 at 9:08 AM PT

did you also go through and review other tutoring providers like http://www.etutelage.com, http://www.learninghours.com, etc. ??

risha Friday, December 14, 2007 at 3:09 AM PT

please get me the mail id of ravi deol ex md BARISTA………

rohit Thursday, January 10, 2008 at 9:28 AM PT

Our site helps investors to research Indian stocks, funds, and ETF’s. Qualified investors can receive research on hedge funds and vc funds depending on regulatory and aml approval process. http://www.indiafund.net

David Hepworth Tuesday, March 25, 2008 at 3:24 AM PT